Murphy v. Padilla

• Decision Date: 09 February 1996
• Docket Number: No. H013695,H013695
• Citation: 42 Cal.App.4th 707,49 Cal.Rptr.2d 722
• Court: California Court of Appeals Court of Appeals
• Parties: , 96 Cal. Daily Op. Serv. 974, 96 Daily Journal D.A.R. 1577 Maryanne MURPHY et al., Plaintiffs and Respondents, v. Patricia PADILLA, Defendant and Appellant.

Page 722

49 Cal.Rptr.2d 722

42 Cal.App.4th 707, 96 Cal. Daily Op. Serv. 974,

96 Daily Journal D.A.R. 1577

Maryanne MURPHY et al., Plaintiffs and Respondents, v. Patricia PADILLA, Defendant and Appellant.

No. H013695.

Court of Appeal, Sixth District, California.

Feb. 9, 1996.

McNamara, Houston, Dodge, McClure & Ney, Douglas C. McClure and Lisa R. Roberts, Walnut Creek, for Appellant.

Maryanne Zanois Murphy and David J. Murphy, San Jose, Wilson, Ryan & Campilongo, Andrew H. Wilson, San Francisco, and Shauna T. Rajkowski, Honolulu, HI, for Respondents.

ELIA, Associate Justice.

Appellant Patricia Padilla challenges an order of the trial court enforcing an alleged oral settlement agreement pursuant to Code of Civil Procedure section 664.6. ¹ The trial court's judgment enforcing the alleged settlement disposes of all issues in the underlying suit brought by respondents, David and Maryanne Murphy, over a disputed easement held by appellant.

Appellant raises the following questions: 1) whether an oral stipulation made during mediation referenced pursuant to section 638 is "before the court" within the meaning of section 664.6; 2) whether an alleged settlement agreement entered into by an attorney on behalf of his or her client is binding without the client's express consent; and 3) whether oral or written agreements made during the course of mediation are admissible to prove settlement without offending Evidence Code section 1152.5.

We first conclude that the underlying proceeding was not properly referenced pursuant to section 638 and thus at most the parties participated in a voluntary, nonbinding mediation. Next, we find that an oral stipulation before a court-referenced mediator, who lacks adjudicative authority to render a binding decision, does not meet the requirements of section 664.6. Finally, an attorney may not bind his or her client to a settlement agreement, at least within the context of section 664.6, unless the client personally agrees to the settlement.

In light of our holding, we need not consider the final issue regarding the scope of Evidence Code section 1152.5.

Factual and Procedural Background

In 1989, respondents purchased the lot adjoining appellant's property in the Santa Cruz Mountains. Although they engaged the services of a title company, respondents did not discover the existence of appellant's 40-foot express recorded easement until after purchasing the property. Respondents claim that the easement was not disclosed to them by their real estate broker, its agents or the seller's broker.

On March 23, 1992, respondents filed their initial complaint alleging various contract claims, fraud and an equitable claim for abandonment. They named appellant, the seller, respondents' listing agent, their real estate agent, their broker of record, and the broker and agent for the seller.

On February 15, 1994, the trial court referred the matter to mediation pursuant to section 638. The record does not include an agreement by the parties stipulating to the reference nor does the court order describe the scope of the reference as required by rule 244.1(a) of the California Rules of Court.

Retired Superior Court Judge George Bonney supervised two mediation sessions on March 11, 1994 and July 18, 1994, in which a tentative settlement was formulated. The first session was attended by respondents, appellant, their respective counsel, and the remaining defendants in the underlying suit. A second session was scheduled to draft a use agreement for the disputed easement and was attended only by respondents, appellant and their attorneys.

The record is unclear as to the extent of participation by appellant. She claimed in her declaration she was so intimidated by respondents, who are both attorneys, that she stayed in a separate room during the second mediation. Appellant also stated that she wanted to speak personally with Judge Bonney, but was denied the opportunity. Judge Bonney, on the other hand, stated in his declaration that respondents and appellant "each separately confirmed their agreement on all points" with him. Judge Bonney then wrote out by hand a document memorializing the terms of the alleged agreement. The handwritten document was not signed by the parties, but was intended to be a draft for the attorneys to finalize later.

Approximately two weeks later, appellant informed her attorney that she could not sign the use agreement due to several unresolved concerns. As a result, respondents brought a motion to enforce settlement pursuant to section 664.6. Although the trial court initially expressed uncertainty as to the role played by Judge Bonney and the applicability of Evidence Code section 1152.5, it granted respondents' motion.

Standard of Review

Respondents initially maintain that this appeal can be resolved by mere application of the "substantial evidence" standard of review. We agree with respondents that the trial court's factual determination on a motion to enforce settlement will be affirmed if the court's ruling is supported by substantial evidence. (In re Marriage of Assemi (1994) 7 Cal.4th 896, 911, 30 Cal.Rptr.2d 265, 872 P.2d 1190.) We make such a determination, however, only after deciding whether the parties meet the statutory conditions of section 664.6. Construction and application of a statute involve questions of law, which require independent review. (Dean W. Knight & Sons, Inc. v. State of California ex rel. Dept. of Transportation (1984) 155 Cal.App.3d 300, 305, 202 Cal.Rptr. 44.)

Discussion

Section 664.6 provides a statutory procedure for enforcement of settlement agreements pending litigation. ² The trial court may enter judgment pursuant to a stipulated agreement to settle in one of two ways: 1) in a writing signed by the parties, or 2) by oral agreement made "before the court."

Appellant argues that the trial court improperly enforced the alleged settlement agreement because respondents failed to meet either of the two statutory conditions. Respondents maintain that the second part of the statute was satisfied because oral stipulations made during mediation referenced pursuant to section 638 are "before the court" within the meaning of section 664.6. Alternatively, respondents claim that the alleged oral agreement made during mediation is enforceable as an independent contract. For reasons stated below, we agree with appellant and conclude that the trial court erred in enforcing the oral agreement under section 664.6.

A. An Oral Settlement Agreement Under Section 664.6 Must be "Before the Court."

Section 664.6 states that the oral agreement must be recited "before the court" and refers to a stipulation presented in a "judicially supervised" proceeding. (City of Fresno v. Maroot (1987) 189 Cal.App.3d 755, 761-762, 234 Cal.Rptr. 353; Richardson v. Richardson (1986) 180 Cal.App.3d 91, 97, 225 Cal.Rptr. 370.)

It is well settled that an oral agreement recited to a judge in the course of a settlement conference supervised by that judge satisfies the "before the court" requirement. (See, e.g., Casa de Valley View Owner's Assn. v. Stevenson (1985) 167 Cal.App.3d 1182, 1189, 213 Cal.Rptr. 790.) Appellant argues that section 664.6 should be interpreted according to its plain meaning and limited to proceedings before a judge. The Supreme Court made it clear in In re Marriage of Assemi, supra, 7 Cal.4th 896, 30 Cal.Rptr.2d 265, 872 P.2d 1190, however, that a broader interpretation is necessary to accommodate the growing reliance on alternative dispute resolution (ADR) methods of settling litigation.

In Assemi, the court provided a two-part test. Oral stipulations before a subordinate court officer meet the "before the court" requirement if: 1) the court officer was empowered to act with an adjudicatory function, and 2) the court officer did, in fact, act in that capacity. (Id. at p. 909, 30 Cal.Rptr.2d 265, 872 P.2d 1190.) Relying on this standard, the Assemi court concluded that the retired judge was presiding over a "judicially supervised" proceeding. (Ibid.) He acted in a "hybrid" capacity combining the functions of a temporary judge authorized by the California Constitution and an arbitrator under the private arbitration statutes. (Ibid.)

In the present proceeding, the original stipulations and order are ambiguous as to whether Judge Bonney was empowered with an adjudicative function. The case management conference minute order shows that the parties were referred to mediation pursuant to section 638.

Section 638 contains two distinct sections. ³ Under section 638, subdivision 1, a trial court makes a general reference to try all legal and factual issues in an action or proceeding and report a statement of decision to the trial court. The referee is vested with power to make definitive disposition of issues and the action subject to power of the court to affirm the referee's report. (See 6 Witkin, Cal. Procedure (3d. ed. 1985) Proceedings Without Trial, § 46, pp. 360-361.) Under section 638, subdivision 2, there is a specific reference to ascertain some fact, but the referee's decision is not binding on the court. (See, e.g., National Brass Works v. Weeks (1928) 92 Cal.App. 318, 321, 268 P. 412; Aetna Life Ins. Co. v. Superior Court (1986) 182 Cal.App.3d 431, 436, 227 Cal.Rptr. 460.)

It is imperative to determine whether the parties were referred to a general reference proceeding, a special reference, traditional mediation, or some combination of these. A general referee, like a temporary judge or private arbitrator, may be empowered to make binding decisions about controverted issues. (See Assemi, supra, 7 Cal.4th at p. 907, 30 Cal.Rptr.2d 265, 872 P.2d 1190.) Therefore, an oral stipulation before a general referee pursuant to section 638, subdivision 1, could support an enforceable settlement agreement pursuant to 664.6. An oral stipulation before a special referee pursuant to section 638, subdivision 2, however, cannot satisfy the "befor...